Oil and Gas Majors’ 2024 AGMs: The low-carbon investment gap

Accela’s annual pre-AGM in-depth on Global Oil and Gas Majors, assesses the achievability of and the investment needed to meet net carbon intensity targets. 

This report launches Accela’s Transition League Table, a new framework to rank European major's oil and gas transition strategies, incorporating the most critical elements of transition performance.  

In our latest analysis, we delve into the performance and ambition of the transition plans for 5 European and 2 Australian oil and gas majors. 

Our analysis finds minimal progress in reducing net carbon intensity (declining on average ~4% on FY19-23) compared with targets of 15-20% (FY19-23), with European majors needing to deliver ~US$300 bn of investment between now and 2030 to meet existing targets.

Transition of energy portfolios and investment to establish low-carbon products remains the key to emissions reduction

Shell and BP have made the most progress in shifting energy sales portfolios to low carbon (~5% as of FY23) while delivering a 3-5% reduction in net carbon intensity from FY19-23 (~3% for Shell without offsets). 

Without further low-carbon investment and reducing oil and gas, the low-carbon mix of products will not materially change by FY30, placing emissions targets at risk and companies unprepared for peak oil demand. 

Last year we expected to see a series of downgrades across oil and gas, lowering emissions targets and capital expenditure for low carbon.

Only Shell followed this course, shrinking its appetite for low carbon, removing its FY35 intensity target, and guiding to a lower proportion of low-carbon capital expenditure (~20% FY24-25 vs FY23 23%).

Key takeaways

• 01 BP’s transition plan surpasses European peers in progress and ambition

  • Launching Accela’s Transition League Tables, we compare the performance of European Majors across four key categories (emissions, oil and gas decline, low-carbon capex, and low-carbon volumes).

  • BP’s transition strategy has ranked first, largely driven by its ambition to reduce oil and gas production (-13%), increase low-carbon capex (44%-50%), and strong low-carbon progress.

  • Following BP are TotalEnergies, Shell, Eni and Equinor.

• 02 FY30 emission intensity targets are fast approaching, and little progress has been made to date

  • To date, majors have delivered little progress on their net carbon intensity, declining on average ~4% from FY19-23.

  • Equinor lags behind its peers, achieving a mere 1% against its -20% target.

  • Eni, Shell and BP are level, delivering ~3% reduction (excluding offsets).

  • TotalEnergies has delivered a -7% reduction however, like its peer Equinor, we estimate the company’s target covers just ~30% of total energy sales, amplifying the impact of its low-carbon progress.

  • Inconsistent methodologies for measuring emissions continue to be a barrier to comparing peers.

• 03 European majors will not meet FY30 emission intensity targets with current low-carbon product ambitions

  • When considering the impact of FY30 low-carbon product targets on carbon intensity, companies will fall short of meeting targets by up to 15%.

  • Companies that exclude certain third-party sales (materially traded oil and gas), such as TotalEnergies and Equinor, appear to have an advantage in progressing NCI targets between FY23-30. Due to this smaller footprint low carbon levers will have more of an impact in reducing emissions intensity for TotalEnergies (11% reduction) and Equinor (14% reduction) outpace peers (1% to 8% reduction).

  • To FY30, growing gas sales should not be considered a material lever for lowering carbon intensity. A 10% increase in gas as a percentage of energy sales by FY30 will drive a minimal ~2-4% decline in emission intensity. Instead, a 10% increase in low-carbon fuels by FY30 will, on average, decrease carbon intensity by ~13%.

• 04 US$300bn investment will be needed to meet emission intensity targets

  • With the minimal progress in reducing emissions intensity to date, we find that the equivalent of 309GW of renewables is required between FY24-30 to reach net carbon intensity targets.

  • This requirement is weighted heavily to companies like BP and Shell, whose targets cover the full scope of emissions compared to peers like TotalEnergies (~30% coverage).

  • We estimate 309GW to translate to a ~US$300bn in low-carbon investment between now and FY30, assuming a 50:50 investment in solar and onshore wind.

  • Under current company guidance (FY24-30), majors have committed a total of US$166bn, leaving a minimum investment gap of ~US$134bn (~US$19bn p.a).

• 05 The ambition of Australian majors sits well below European peers

  • Australian oil and gas companies, Woodside and Santos are positioned firmly below the Europeans.

  • Both companies lack intensity targets, and scope 1 & 2 ambition is 30% (vs ~50% for Europeans).

  • Minimal progress has been made on building out low-carbon offerings, and both companies have significantly outpaced Europeans in growing oil and gas.